GCC Countries Research Articles

Impact of energy intensity, green economy and blue economy to achieve sustainable economic growth in GCC countries: Does Saudi Vision 2030 matters to GCC countries

The study examines the role of energy intensity, green economic factors, and blue economic factors to achieve sustainable economic growth in gulf countries. Additionally, we analyze the role of studied factors in view of Saudi Vision 2030. The findings of asymmetric ARDL report that labor and marine trade are the contributing factors of economic growth in gulf countries. However, the factors have improved in post-Vision 2030 estimations. The negative shocks in energy intensity leads towards sustainable economic growth. The positive shocks in renewable energy, grants, marine trade, and marine tourism are key factors for economic development. In country wide analysis, we recommend gulf countries need to widely focus on green and blue economic factors. For green indicators, research and innovation need extensive reforms to participate in sustainable economic development. In reviewing of the blue factors, we recommend reforms in fishery and marine tourism sectors.

THE IMPACT OF CAPITAL STRUCTURE ON ISLAMIC BANKS PROFITABILITY: EVIDENCE FROM GCC COUNTRIES

This paper aims to reveal the relationship between capital structure variables and the Profitability of Islamic banks. The examination has been performed using panel data for a sample of 05 Islamic banks operating in the Gulf Cooperation Council GCC countries (2010-2020). Capital Structure is measured by Deposit to Total Assets (DTA) and Equity to Total Assets (ETA) ratio. In contrast, return measures Profitability on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Data collected were analyzed by using E-Views10 software. The research results indicate that the ETA ratio has a positive and significant relationship with ROA. Whereas, The Deposit to Total Assets (DTA ratio) has no significant relationship with Return on asset (ROA). There is an insignificant relationship between (ETA ratio, DTA ratio) and the ROE ratio. Moreover, there is a significant solid effect between the ETA ratio and Net Profit Margin (NPM). At the same time, there is no significant relationship between the DTA ratio and Net Profit Margin (NPM). Therefore, the study can guide The GCC Islamic bank executives, The Shariah Supervisory Board, and the decision-makers in the GCC area to rely on specific capital structures for Islamic banks to improve their profitability.

Impact of Financial Deepening, Energy Consumption and Total Natural Resource Rent on CO2 Emission in the GCC Countries: Evidence from Advanced Panel Data Simulation

The study examined the dynamic nexus between financial deepening, natural resource rent, nonrenewable-energy and renewable-energy consumption and CO2 emission by using a dataset of six GCC countries (UAE, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain) from 1993 to 2019. For estimation, study applying second-generation panel unit root, cointegration and long-run estimation tests for robust and efficient results. The study confirms the presence of cross-sectional dependency while economic expansion and nonrenewable-energy contribute to CO2 emissions, financial deepening and renewable-energy consumption have a significant impact on reducing environmental degradation. Furthermore, the Dumitrescu-Hurlin causality test reveals a statistically significant bidirectional correlation between financial deepening, consumption of nonrenewable-energy and renewable-energy and CO2 emission. In light of these findings, a number of policy recommendations are provided to help the GCC countries overcome on CO2 emissions while promoting economic growth.

Trade Openness, Industrialization, Urbanization and Pollution Emissions in GCC countries: A Way Towards Green and Circular Economies

The GCC countries are moving toward circular and green economies in their long-run visions. This transformation is accelerating the industrialization, urbanization, economic growth, and Trade Openness (TO) in the region. This present study examines the effects of these economic indicators on pollution emissions in the GCC panel from 1980-2019 using panel techniques. We found the environmental Kuznets curve. Moreover, TO is helping reduce CO2 emissions. Hence, economic growth and TO are helping the GCC region to follow the track of green and circular economies. In short run, TO also reduces emissions. Industrialization and urbanization accelerate emissions in long run. Thus, both indicators have environmental consequences in the GCC region in the long run. However, these indicators could not harm the in short run. To follow the track of green and circular economies, the study recommends increasing trade openness in the region and imposing carbon taxes on industrialization and urbanization to reduce their environmental consequences.

Financial stability and monetary policy reaction: Evidence from the GCC countries

This paper investigates the interaction between monetary policy and financial stability in the Gulf Cooperation Council (hereafter GCC) countries by introducing a new composite financial stability index to monitor the financial vulnerabilities and crisis periods. To this end, the study estimated monetary policy reaction functions for each GCC country (namely, Bahrain, Kuwait, Saudi Arabia, and the United Arab Emirates) using the Nonlinear Autoregressive Distributed Lag Model (NARDL) over the period from 2006-Q4 to 2020-Q2. Empirical findings indicate that monetary authorities' response to the deviation of inflation from their target level, output gap, or exchange rate movement differ in magnitude, sign, and significance across the GCC countries. The results further explain that monetary authorities react significantly to negative or positive shocks to financial stability, but they react differently in the short or long term. Overall, an augmented Taylor rule including financial stability as an additional monetary policy target is more appropriate for the GCC countries.

Money and its Role of Affecting Income in GCC Countries

The effect of money on economic growth has been a debate for centuries now. Even though many economists do agree on that effect, different analyses are assumed concerning the transmission mechanism. The main focus of this study is to empirically investigate the relationship between the money supply and GDP in the Kingdom of Saudi Arabia, Kuwait, and the United Arab Emirates during the period from 1992 until 2019. The data, studied in both nominal and real terms, revealed that the GDP in each country showed dependency on money supply only in real terms. However, the results differ according to the money aggregate from which the effect arises. Similar findings were derived from cointegration and Granger causality tests. The lack of consensus of a solid effect of money on income is inconsistent with the Monetarists’ view regarding the role of money in the economy.

Knowledge, Awareness, and Practices of University Students Toward the Role of Dietary and Lifestyle Behaviors in Colorectal Cancer: A Cross-Sectional Study from Sharjah/UAE.

Background:The incidence of colorectal cancer (CRC) has risen worldwide, with increasing prevalence in the UAE and GCC during the last few decades. Dietary and lifestyle behaviors play a pivotal role in the development and prevention of sporadic, with knowledge and awareness considered the first line of defence. Knowledge, awareness, and practices have been examined in different parts of the world, with scarce research have been conducted in the GCC countries and the UAE in particular. This study explored the UAE university student’s knowledge and awareness toward the role of dietary and lifestyle behaviors in CRC. Methods:A cross-sectional study was conducted, using an online multi-component self-reported questionnaire. Descriptive and analytical statistics were used. Results:A total of 1213 students participated in the study, with the vast majority (92.7%) of the surveyed students reported good knowledge scores toward CRC risk factors. Significant differences (P<0.05) were found between the two sexes regarding dietary and lifestyle factors associated with CRC. Females consumed more vegetables compared to males, had lower intakes of red and processed meats, and were found to be fewer smokers. Being single (P= 0.0001), undergraduate (P=0.005), with medium to low income (P=0.026) all were significantly associated with increased risk of having poor knowledge about CRC, while being a medical student was significantly associated (P= 0.0001) with a 55% lower risk of having poor knowledge. Conclusion:Despite the good knowledge, university students’ dietary and lifestyle behaviors necessities improvement, with barriers that require to be addressed.

Basic Psychological Needs Satisfaction and its Impact on the Mental Health among Undergraduate Students in Selected GCC Universities

The study aims to measure basic psychological needs’ satisfaction-frustration among undergraduate GCC students’ and to investigate the function of satisfaction or frustration of the basic psychological needs on positive mental health or depressive symptoms. To achieve these aims, three measures have administered on a sample consisted of 608 undergraduate students from three GCC countries (Oman, Qatar, and Saudi Arabia: (1) Basic Psychological Needs Satisfaction Frustration Scale (BPNSFS), (2) Warwick-Edinburgh Mental Wellbeing Scale (WEMWBS), and (3) The second edition of the Beck Depression Inventory (BDI-II). Descriptive statistics explored that the level of needs satisfaction was high and convergent to a certain extent in the three countries, while the level of frustration was moderate with some disparity among the three countries. The results also showed a clear pattern of correlation between the level of satisfaction and mental health, and correlation between frustration and depressive symptoms. Finally, Multiple Regression Analysis showed that it is possible to predict individuals’ mental health according to their satisfaction or frustration with the basic psychological needs. The study concluded that basic psychological needs’ satisfaction is positively associated with mental health, while needs frustration is associated with depressive symptoms. Thus, these results, provides additional evidence from the Arab context on the integrity of the foundation on which the Basic Psychological Needs Theory is based.

Extreme dependence between structural oil shocks and stock markets in GCC countries

This paper investigates how extreme oil price shocks affect the stock market returns of major oil-exporter countries (Gulf Cooperation Council [GCC] countries) at different time horizons. We contribute to the literature by examining the extreme co-movements (tail dependence) between the different sources of oil price shocks and stock market returns directly by testing the tail dependence of the joint distribution across frequencies. Our methodology incorporates the recent oil shock decomposition of Ready (2018) with a novel quantile cross-spectral dependence approach of Baruník and Kley (2019) and wavelet coherence analysis for the period of June 1, 2006 to February 28, 2020. These two approaches enable the detection of the dependence structure during extreme market conditions (bearish and bullish markets) and/or at different time horizons (frequencies). Examining the strength of co-movement between the GCC stock market returns and disaggregated oil shocks may impact the GCC-country portfolio's value at risk levels. The findings provide potential implications for portfolio investors in the GCC region, who could consider co-movement through both return quantiles dependence and time frequencies when designing their portfolios.

Asymmetric and dynamic links in GCC Sukuk-stocks: Implications for portfolio management before and during the COVID-19 pandemic

This paper investigates the asymmetric and dynamic links between Sukuk and Islamic-conventional stocks for the GCC countries. It uses the VARMA-AGARCH modelling approach of McAleer, Hoti, and Chan (2009), on daily return indices for the period spanning from August 13, 2013 to December 31, 2020. Empirical results reveal the existence of interdependence both in return dynamics and shock effects as well as in volatility spillovers and cross-markets asymmetric shock spillovers. The results point out also significant dynamic interplays between Islamic and conventional equity indices. The estimated hedging effectiveness suggests that incorporating stocks in a full sukuk portfolio does not affect the variance but slightly reduce the risk-adjusted return except for DJIM GCC equity index in the full sample period. Alternatively, incorporating sukuk in a full stocks unhedged portfolio significantly reduce its variance and raise the risk-adjusted return except for the DJIM GCC equity index. We also note that sukuk is overweighted for both portfolio design and hedging strategies and provide the best profit-making portfolio. The findings continued for the COVID-19 period.

The spatial analyses of consumption-based CO2 emissions, exports, imports, and FDI nexus in GCC countries.

Trade and foreign direct investment (FDI) could have environmental consequences for local and neighboring economies due to their spatial linkages and could also affect the production and consumption-based emissions. Hence, we examine their direct and spillover effects on territory-based CO2 (TCO2) and consumption-based CO2 (CCO2) emissions in GCC countries using a period 1990-2019 and spatial Durbin model (SDM). The empirical results have corroborated the presence of the environmental Kuznets curve (EKC) in an association of economic growth and emissions in both TCO2 and CCO2 models. Hence, economic growth has a positive relationship with CO2 emissions at the first phase of the EKC and has a negative relationship with CO2 emissions at the later stage of the EKC. The spillovers of economic growth were found the opposite in the case of TCO2 and insignificant in the case of CCO2. The effect of Financial Market Development (FMD) is found negative on TCO2 emissions and insignificant on CCO2 emissions. Exports have a positive direct effect on TCO2 emissions and have negative spillovers, direct, and total effects on CCO2 emissions. The positive direct effect of exports on TCO2 reflects that exports are raising TCO2 emissions in domestic economies. On the other hand, the negative direct effect of exports on CCO2 explains that exports are helping reduce CCO2 emissions in domestic economies. Moreover, negative spillovers of exports on CCO2 indicate that increasing exports of a GCC country helps reduce CCO2 emissions in neighboring countries. In addition, the negative total effect of exports on CCO2 implies that increasing exports reduce CCO2 emissions in the whole GCC region. Imports have positive spillovers and direct effects on TCO2 and have positive spillovers effects on CCO2 emissions. FDI has negative direct and spillover effects on CCO2 and positive spillover effects on TCO2. We suggest promoting FMD, FDI, and exports to have their positive ecological effects in GCC countries.

The Impact of the Real Interest Rate, the Exchange Rate and Political Stability on Foreign Direct Investment Inflows: A Comparative Analysis of G7 and GCC Countries

The Impact of the Real Interest Rate, the Exchange Rate and Political Stability on Foreign Direct Investment Inflows: A Comparative Analysis of G7 and GCC Countries

Corporate Voluntary Disclosures in Emerging Markets: Empirical Evidence From the GCC Equity Markets

In their path of searching for additional sources of information for better-informed decision-making process, market participants are presented with Voluntary disclosures. This paper aims at examining the determinants of voluntary disclosures in the GCC countries. A cross-sectional multiple regression analysis with a sample size of 74 listed firms from the GCC equity markets shows that leverage and economic sectors dominated mainly by “Real Estate” and “Services/Insurance”, have statistically significant impact on voluntary disclosure. A remarkable finding of this paper indicates that the profitability variable measured in terms of return on equity (ROE) significantly explains the variation in the voluntary disclosure score in all sectors except for the “Services/Insurance” one.

How Do the Crises of Falling Oil Prices and COVID-19 Affect Economic Sectors in the Rentier Economies? Evidence from the GCC Countries

This study analyses the impacts of unprecedented falling oil prices and the COVID-19 outbreak in early 2020 on the stock markets of GCC countries – countries considered as natural resources-based rentier economies. To this end, the research uses daily data for 295 companies under the categories of services, industrial, and financial sectors in GCC countries from January 1, 2020, to February 23, 2021. The analysis was conducted over two phases. The first phase extended from January 1, 2020, to July 30, 2020, while the second phase extended from August 01, 2020, to February 23, 2021. The research utilised 18 random effect models in each phase to capture the impact of the oil price crisis and COVID-19 outbreak on each economic sector in each of the GCC countries. This study’s findings reveal that the decline in oil prices and the spread of the COVID-19 epidemic were strong in the first phase, while this impact diminished in most economic sectors in the Gulf countries in the second phase. However, the GCC countries have not been impacted equally by the crisis of falling oil prices and the COVID-19 outbreak. The results show that the hardest-hit countries are Saudi Arabia, United Arab Emirates, and Qatar, respectively, while the least impacted countries are Oman, Bahrain, and Kuwait. Furthermore, the sector-wise analysis results reveal that the industrial sector in Saudi Arabia is the sector most affected by the oil price crisis, and the financial sector in Saudi Arabia is the sector most impacted by the COVID-19 outbreak in the GCC countries.

Exploring the GCC Progress Towards United Nations Sustainable Development Goals

The United Nations 17 Sustainable Development Goals were agreed in 2015 by all the members' countries to be achieved by 2030. The results of several reports reveal that some countries are making good progress to achieve these goals, the progress of others is low and most likely they will not be able to achieve these goals by the deadline if serious actions are not taken. The purpose of this article is to explore the progress of the Arabian Gulf region towards these goals and identify the Goals in which the region has major challenges. A qualitative research approach using PRISMA compliance is adopted to extract the region's progress and commitment from 91 different documents. The results show that the region has major challenges in four Goals. Specific issues associated with these goals and the GCC countries plans to overcome these issues are discussed in the paper.

The evolution of the Gulf Coopera-tion Council approaches to security issues after the Arab Spring

The painful consequences of political, economic and social shocks provoked by the Arab Spring forced the political elites of the Middle Eastern states to revisit traditional approaches to maintaining stability and security in the region. This inevitably aff ected the activities of the Gulf Cooperation Council, which was from the outset established in order to enhance cooperation between the countries of the region primarily in the fi eld of security. This paper attempts to identify the key milestones, factors and trends that have shaped the GCC decision-making process in the security sphere over the past 10 years since the beginning of the Arab Spring. The author shows that the Arab Awakening has encouraged the GCC member-states to deepen military-political integration, aimed at strengthening their defense capabilities, as well as their abilities to respond to external and internal challenges. The author notes that the GCC countries still view Iran as the main source of all these threats; moreover, con-sidering substantial strengthening of Iran’s infl uence in the Middle East their position has even hardened. Tehran is accused of meddling in the internal aff airs of the GCC member-states, supporting illegal Shiite groups operating on their territory, and instigating religious discord. In this context, it is quite natural that the Iran’s nuclear programme is of particular concern to the GCC. At the same time, the author emphasizes, that although the GCC member-states declare common approach towards Iran, their practical actions can vary signifi cantly. In particular, it was Qatar which opposed an excessively hard-line approach towards Iran. This fact, as well as accusations against Doha of supporting terrorist and extremist groups, led to two crises that shook the GCC in the 2010s. However, the fact that these crises have been eventually settled shows that security issues still press regional actors towards strengthening the capacities of the GCC. Especially since military threats have been compounded by a new threat — of the outbreak of the SARS-CoV-2 pandemic. The author concludes that this new threat, which has already incited the GCC to promote cooperation in a health sector, will also strengthen the member-states’ focus on various nonmilitary challenges including epidemiological and environmental ones.

Trends in Indian Labour Migration to Gulf Countries from 1990 to 2019: An Assessment of Literature

Globalisation around the world has allowed the labour movement between the countries. International migration i.e. migration between one country to another country has become a common phenomenon. India has exported a significant number people migrating to different regions across the world under different circumstances. Large number of unskilled and semi-skilled Indian labour migration to Gulf countries is a recent phenomenon. The upward trend in labour migration to the Gulf countries started when large-scale development activities took place in gulf countries due to an increase in oil prices in the 1970s. The lack of employment opportunities, poverty, low wages and poor standard of living in India caused many Indians to migrate to gulf countries to gain economic benefits. There is a rapid growth rate of 79 percent in the Indian migrants who were migrated to GCC countries over the two decades. India was the leading country of origin of international migrants, with 17.5 million globally. As many as 9.3 million migrants are concentrated in gulf countries. India remains top among the other countries in terms of total remittances in 2019($83.1 billion), compared to 1990 ($2.3 billion), and it contributed 2.9 percent of the Indian GDP in 2018-19. The present paper represents recent trends in labour migration to GCC countries from India and also attempts are made to study the volume of remittances and its impact on the Economy. The paper is based on the secondary data from the publications of the national and international organizations and existing literature is used for the purpose of the present study.

Trends in Indian Labour Migration to Gulf Countries from 1990 to 2019: An Assessment of Literature

Globalisation around the world has allowed the labour movement between the countries. International migration i.e. migration between one country to another country has become a common phenomenon. India has exported a significant number people migrating to different regions across the world under different circumstances. Large number of unskilled and semi-skilled Indian labour migration to Gulf countries is a recent phenomenon. The upward trend in labour migration to the Gulf countries started when large-scale development activities took place in gulf countries due to an increase in oil prices in the 1970s. The lack of employment opportunities, poverty, low wages and poor standard of living in India caused many Indians to migrate to gulf countries to gain economic benefits. There is a rapid growth rate of 79 percent in the Indian migrants who were migrated to GCC countries over the two decades. India was the leading country of origin of international migrants, with 17.5 million globally. As many as 9.3 million migrants are concentrated in gulf countries. India remains top among the other countries in terms of total remittances in 2019($83.1 billion), compared to 1990 ($2.3 billion), and it contributed 2.9 percent of the Indian GDP in 2018-19. The present paper represents recent trends in labour migration to GCC countries from India and also attempts are made to study the volume of remittances and its impact on the Economy. The paper is based on the secondary data from the publications of the national and international organizations and existing literature is used for the purpose of the present study.

Rampant corruption: The dilemma facing economic diversification in oil-abundant MENA countries

This paper aims, on the one hand, to investigate the impact of corruption on economic diversification in 11 oil-abundant MENA countries and three successful diversifiers (Canada, Norway and Malaysia) over the period 1996–2019 by using the Arellano-Bond difference GMM estimator that is effective in addressing the endogeneity problem and, on the other hand, to reveal how much the level of economic diversification will increase if MENA oil exporters will have control of corruption scores similar to that of a successful diversifier like Canada. The main findings indicate that higher control of corruption leads to more diversification while higher oil rents lead to poor diversification in oil-exporting MENA countries. The joint impact of control of corruption and oil rents is effective in boosting economic diversification in MENA oil exporters. The results also reveal that the rate of improvement in diversification brought by replacing MENA oil exporters' control of corruption scores with those of Canada is 0.53%. Closing the control of corruption gap determines how quickly MENA oil exporters can promote economic diversification. Furthermore, non-GCC countries need to exert much more effort compared to GCC countries in order to catch up with Canada's control of corruption level. Most non-GCC countries must first address the serious problem of instability which is an essential precondition for achieving broad-based economic diversification.

Does Royal Directors Matter for Decreasing Earnings Management in GCC Countries?

Does Royal Directors Matter for Decreasing Earnings Management in GCC Countries?